Scale Up Capacity|
there was a highly informative lecture on polyester scenario by a leading
American fibre and intermediate manufacturer. He succintly answered the question
Why is Chinese polyester so strong? Integration and sheer scale to an
extent, Chinese polyester industry has achieved good integration from
polymerisation to DTY. Approximately, 75% of polyester is continuous
polymerisation and not batch. They also have used little branding to influence
downstream choice. This has helped the Chinese industry reach a highly
competitive position in pricing at DTY and finished product level. Besides, the
Chinese scenario showed positive signs in quality, reliability and logistics. In
new loom shipments between 1997 and 2006, China received 57% of shuttle looms
and 85% of shuttleless looms, according to the International Textile
Manufacturers Federation (ITMF).
Now there is a downside in the Chinese world the
costs have started rising, blunting its competitive edge in the global market.
It is not prepared to take long-term export orders following appreciation of RMB.
Export rebates are slowly being phased out in China. This has raised the cost of
manufacturing goods by 14% to 17% at factory level. Chinese labour might be
cheap, but not cheap unreasonably any more, say sources. Tougher labour laws and
environmental pressures are adding new woes to the functioning of industry. Says
the American Chamber of Commerce in Shanghai: "More than half of foreign
manufacturers in China believe the mainland is losing its competitive advantage
over countries like Vietnam and India. Two major problems with India are low
capacity and failure to stimulate the domestic demand. In polyester, China's
capacity is forecast to be at 64% of global capacity by 2010, while India's is
expected to be a meagre 9.5% of total. However China's overall growth is likely
to slacken. The rapidly developing economies like Vietnam, Sri Lanka and
Bangladesh are too eager to fill the gaps in the market that China will be
leaving in the wake of this slowdown. Will India respond to this wake-up call?
Quality, reliability and infrastructure apart, much will also depend on building